The ERA provides an annual report to the Minister for Energy on the effectiveness of the Wholesale Electricity Market (WEM). The report includes an assessment of any specific events, behaviours or matters that have impacted on the effectiveness of the WEM and also any recommended measures to increase the effectiveness of the WEM in meeting the Wholesale Market Objectives.
The WEM allows for competition between generators and retailers, which is expected to deliver electricity at prices less than would otherwise be possible. The market mechanisms are aimed at ensuring the most efficient and least cost generators are used to supply electricity, thus keeping prices as low as practicable. Customers benefit from having a mechanism that ensures they can use electricity when they need it and the electricity is delivered at the minimum practicable cost.
The ERA’s review of the effectiveness of the WEM is important as it identifies whether there are problems with the market design and if improvements are required to make the market more effective in meeting market objectives.